Qatar has contained the effect of an unjust siege by the Saudi-led quartet, thus enabling it to grow faster this year and thereby helping the overall Gulf Co-operation Council (GCC) to expand faster, according to the IMF (International Monetary Fund).

Highlighting that growth in the GCC is expected to recover to 2.4% in 2018 and 3% in 2019, following a 0.4% contraction in 2017; the Bretton Woods' institution said this is mainly due to the implementation of public investment projects, including those consistent with the five-year development plan in Kuwait and “infrastructure investment projects ahead of the FIFA 2022 World Cup in Qatar (where the effect of the rift with Saudi Arabia has been contained)."
Qatar's real (inflation-adjusted) economic growth is expected to be 2.7% this year and 2.8% in 2019 compared to 1.6% in 2017; while consumer price index inflation is expected to harden to 3.7% this year compared to mere 0.4% in 2017. The general price level is expected to see a marginal reduction to 3.5% in 2019.
In Kuwait and Qatar, the fiscal stance is appropriately balanced, with the underlying fiscal position continuing to improve, it said, adding in the coming years, however, each of these countries needs further tightening of the fiscal position to ensure intergenerational equity.
Qatar is expected to see fiscal surplus of 3.6% of gross domestic product (GDP) in 2018 and 10.5% in 2019 against deficit of 1.6% in 2017.
Despite their varying fiscal stances, all MENAP (Middle East and North Africa, Pakistan) oil exporters confront similar medium-term fiscal challenges. Given the high dependence on oil revenue — average fiscal break-even prices in 2020-23 are projected to be above the current oil price levels (except in Iraq, Kuwait, Qatar, Saudi Arabia, and the UAE) — fiscal balances remain vulnerable to oil price movements, IMF said.
Highlighting that the current environment of temporarily high oil prices also provides an opportunity for countries to rebuild buffers, it said the potential threats to the global outlook, including rising trade tensions, could put additional downward pressures on oil prices.
"Therefore, countries should further strengthen their fiscal frameworks to create space in the event policy support is needed," the report said.
Higher oil prices have also improved liquidity conditions for banks. Nevertheless, private sector credit growth remains generally subdued, largely reflecting weak demand given the nascent economic recovery, and a weak real estate market in several GCC countries, it said, adding policy rates in the GCC have risen in line with increases in the US’ federal funds rate, resulting in higher interest rates that could have also affected the demand for credit.
"In Qatar, where real estate lending represents a large share of loans, credit growth remains weak," according to the IMF.
The financial account is projected to improve further in 2018. Many countries have tapped global financial markets this year as of June 2018, MENAP oil exporters had issued sovereign debt worth $32bn (of which $22bn corresponds to Qatar and Saudi Arabia).